Our Ratio Of Exports, Domestic Sales Will Be 50:50: Volkswagen India

Despite struggling in the domestic market with only 1.6 per cent market share last fiscal, the Indian arm of German automaker Volkswagen is working on some long term strategies that involves having a balance of 50:50 between production for domestic and export markets. Dr Andreas Lauermann President & Managing Director of the company tells BW Businessworld about its long term plans for India.

How important is the Asia Pacific market for Volkswagen globally? Within that, how prominent is the Indian market for you?

Asia-Pacific is one of the most important regions for Volkswagen globally. If you look at the months January to May this year, approximately 40 per cent sales came in from this region for the Volkswagen brand globally.

However, most of this is a contribution from China where Volkswagen has a strong presence in the market. As for India, Volkswagen is still establishing itself in the market. Hence, the numbers from India are still not prominent on the global scale. However, Volkswagen believes in the future of the Indian market as it will be one of the most important regions.

Why do you think your sales in India have come down over the years?

India is challenging market in which there have been several factors that have impacted the sales for us. Some of the segments that did really well in the last decade in India were the ones in which we didn’t have offerings – viz. compact sedan and compact SUV.

However, we are learning from the market. You can see that we have already developed the Ameo especially for India in the compact sedan segment and launched it last year. This car did not exist in the product portfolio globally before. Secondly, the Indian consumer is much cost-conscious; however we were present more in the premium part of the segments.

Today, consumers are more value-conscious than price-conscious. In this respect too, we have upgraded all our products to offer more value for money. Finally, we are growing our product portfolio now with products on offer to every customer segment – from hatchbacks to compact sedans, sedans, premium lifestyle vehicles, performance cars and will soon get into luxury sedan segment too.

What specific plans and objectives do you have with reference to your partnership with Tata Motors? Are you jointly working on products for Indian and other markets?

We are currently in the phase of evaluating the potential cooperation based on technical feasibility and adequate levels of synergies. We will communicate concrete details of the outcome at the right time.

What kind of growth potential do you see in India in the next few years? Will you be focusing more on exports rather than on domestic operations for the Indian market?

Our long term target is to have a balance of 50:50 between production for domestic and export markets. That said, our real focus has been and will continue to be on the domestic market.

As you have not launched up! Tiguan, Golf etc., will you be working on some alternative products for the Indian market?

We are currently working towards expanding our product portfolio to reach out to every type of customer. We have recently launched the Tiguan in India and will also be launching the new Passat. Parallel, for the volume segment, several studies and evaluations are going on for the Indian market.

What kinds of additional investments are you making for the Indian market?

We have already invested approximately 825 million euros at our plant in Pune so far. We are continuing to evaluate future possibilities.

How much worth of auto components in terms of euros are you sourcing from India?

We have a localisation of about 82 per cent (excluding engine and gearbox) for the cars which we are manufacturing in India.

Lastly, do you think India can play a prominent role in enabling Volkswagen to become the largest carmaker in the world?

India is a market which is rapidly maturing which reflects both an economy market based on value-for-money. Our success in India will not benefit us locally but also in other similar markets around the world.